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Business, 01.04.2021 20:00 shea3042

Suppose the full employment output level in this economy is $300 billion. In order to move the economy to full-employment output at the lowest possible price level, the aggregate demand curve must shift to the by at each price level. Use the green line (triangle symbols) to show the shift in aggregate demand necessary to return the economy to full employment. Then use the purple drop lines (diamond symbol) to show the macroeconomic equilibrium at full-employment output. Be sure the new aggregate demand curve ( AD2 ) is parallel to AD1 . You can click on AD1 to see its slope. Suppose the government in this economy wants to enact fiscal policies that will shift the aggregate demand curve in the direction and magnitude you indicated. The marginal propensity to consume (MPC) in this economy is 0.8. This implies a spending multiplier of and a tax multiplier of . Consider each fiscal policy listed here. Which policies would shift the aggregate demand curve in a way that restores full-employment output at the lowest possible price level

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